Jim D'Addario Defends His Support Of COICA & Domain Seizures

from the and-a-response dept

I recently posted the list of companies that signed a letter addressed to Attorney General Eric Holder and DHS' ICE boss John Morton, supporting the seizure of domain names that the government believes are involved with copyright or trademark infringement. This included support for both the ongoing "Operation in Our Sites" program by ICE and for the proposed COICA bill which would extend the power of the government to seize domains prior to any adversarial hearings or trials. That list has kicked off some interesting discussions, but Jim D'Addario, the CEO of D'Addario and Company, famous makers of guitar strings, stopped by in the comments to defend his decision to sign onto the list. A few folks asked me to respond, and I figured it would be best to do so in a new post. First, I'll repost what D'Addario said, and then respond:

You really should visit and talk to some companies that are living this experience. There is no way to file a legal law suit in every instance someone is stealing my D'Addario Strings trademark. We are family owned business in the USA with sales of $150 million. Sounds big, and rich and all that!!! However last year we spent $750,000 on legal battles and got nowhere. We would be bankrupt trying to protect the 1000 jobs that we provide here in the USA. We are not General Motors, IBM or NIke. The scale is not there.

If we were allowed legitimate access to the Chinese market and the Chinese were not counterfeiting our product we would be able to create 200 to 500 more jobs in the USA.

Don't paint everyone with a broad stroke of the brush. Telling the companies on the list to work harder is an insult. We work as hard as we possibly can already (its 5:30 AM where i am right now and dont stop working until 6:30 PM.

I have personally visited stores in four Chinese cities to see 7 out of 10 sets of my brand of strings are fake. The packaging is perfect, right down to the American flat and the words "Printed and Made in USA". The strings are shxt.

I wonder how that would make you feel if you started a brand name from nothing in 1974 and built it to the largest in the world only to watch people completely rip it off.

So your suggestioin to me is to work harder and sue everyone? I may as well close up or cash out and watch the 1000 jobs evaporate. Or better, maybe i should move the factory to China and destroy another 1000 US jobs?

Go on Alibaba.com and witness the hundreds of thousands of fake product listings. There is nothing on the site that is real or legitimate. At some point the government has to take some kind of police action. This is not just a civil matter, there are criminal (grand larceny) implications here.

I agree there should be due process before a site is shut down. I dont know what that process should be, but when threre is clear evidence submitted to a government agency that a site is selling fake merchandise the government should have some authority to put a URL on hold until they can defend themselves. Let the theives absorb the burden of defending themselves, don't expect the legitimate folks to foot the bill.

How is possible for the public to ask the legitimate manufacturers to bear the role of the government and police every instance of fraud with a law suit? It would be tens of millions of $$$ a year.

Learn more before developing such strong views and 'black listing' good people.

Jim D'Addario - CEO D'Addario and Company

I can definitely understand where D'Addario is coming from. It's the same position that many of these companies are coming from: they're afraid of the changing marketplace. And, yes, when you see counterfeit products in the market, it's understandable that you would get angry and accuse people of ripping you off. Finally, lawsuits are expensive and time-consuming. But, with all due respect to D'Addario, I think he's making an emotional response to a complex issue without realizing the full implications of the position that he's supporting.

First of all, he overestimates the "damage" done by counterfeit products. We've pointed to study after study that suggest the "harm" done by counterfeits is not nearly as bad as most companies believe. That's because most buyers are not being fooled. They tend to know upfront that they're buying counterfeits, and choose to anyway. In other words, they're not doing so as a replacement, but because they'd prefer the counterfeit (often due to pricing), even knowing that it's of inferior quality. However, the studies have also shown that buyers of counterfeit goods quite frequently later "upgrade" to the real version. The counterfeit purchase is aspirational, rather than a substitution.

So, rather than simply assuming the worst about such things, perhaps a better response is to recognize that this is a sign that a lot of people really like his product and want it. From that, the focus should then be on making the legitimate version available, and really reaching out and connecting with the community of D'Addario enthusiasts (of which there are many), and letting them know where and how they can purchase legitimate D'Addario strings, and even giving people additional incentives to buy the legitimate ones. In other words, out-compete the copycats. If those strings really are crappy, then help people learn how to buy the real deal, and offer them incentives to do so.

And, yes, I know that D'Addario already does quite a lot on this front. It has plenty of community features and works hard to connect with fans. The point then is to trust those fans to actually support you. Time and time again we've seen that companies who treat their fans and customers right and with respect, and don't freak out about "thieves" and "pirates," see quite a nice return. Trust your customers, let them know what's going on and they support you. It seems like that's also likely to be a lot more satisfying than worrying about some copycat.

The fact is some people will always buy some cheap strings out there that may be copycats. Those people were unlikely to buy the legitimate strings in the first place, so why even worry about them?

The part I find most troubling in D'Addario's response is this part:

I agree there should be due process before a site is shut down. I dont know what that process should be, but when threre is clear evidence submitted to a government agency that a site is selling fake merchandise the government should have some authority to put a URL on hold until they can defend themselves. Let the theives absorb the burden of defending themselves, don't expect the legitimate folks to foot the bill.

The first two sentences suggest, at the very least, that D'Addario didn't know what he was supporting in signing. He says that there should be due process before a site is shut down. But the two things the letter supports do not provide due process before a site is shut down. In fact, they barely provide any after the site has been shut down. We're talking about months later before sites are even directly informed about the seizures. The claim that the domains should be "put on hold until they can defend themselves" simply goes against the basic premises of American law, and the concept of innocent until proven guilty. At the very least, if the concern is that the sites should be shut down quickly, then let the government file for a preliminary injunction in which the site can defend itself in a quick adversarial hearing before the site is taken down. The fact that he automatically calls people thieves, despite a lack of conviction, again goes against the basic principles of due process. It's also wrong. These people are not thieves. Thieves steal your actual product so you don't have it any more. They may very well be infringers and counterfeiters, but calling them thieves is incorrect and an emotional response to what is, certainly, an emotional issue.

No one doubts that sites selling counterfeit products is a scary issue for many companies. But that's no reason to throw out the legal books and basic due process, and support gov't-backed censorship of websites on a "guilty until given a chance to prove innocence many months later" process. Yes, this puts some burden on legitimate companies, but that's the price we pay for believing in due process in the US.

I would hope that Mr. D'Addario would reconsider his support for these programs, and instead admit that perhaps he was a bit hasty in supporting efforts that are half-baked and have already resulted in the blatant censorship of legitimate speech in the form of certain blogs. If he truly wants help responding to counterfeiters, at the very least, he should be horrified at what's been done already falsely in the name of stopping counterfeiting and infringement. He should instead, be putting pressure on these officials to focus on more clearly defined laws that actually tackle the problems, rather than broadly worded laws that result in clear censorship.

It seems like he really thinks that people are being fooled into purchasing counterfeit products, but that's just not the case. Since the purchasers know that they're fake, they're competitors, and A'Daddrio would do better to treat them that way.

Jim, if those products said Joe's Strings instead of A'Daddrio, would you want court action again them? Or you would just consider them a competitor and work harder to keep your place in the market? And would the idea of working harder (or differently) be so offensive then?

Re:

"Jim, if those products said Joe's Strings instead of A'Daddrio, would you want court action again them?"

To me, that isn't at ALL the issue. Trademark infringement is a different animal, because regardless of what percentage of people we're talking about, some consumers ARE going to be fooled by the infringement, and a business's name is their livelihood. And Jim's company makes a SICK GOOD product. I don't blame him for being pissed or wanting to figure out a way to keep people from slapping his and his company's name on shoddy crap.

No, the issue is the support for these horrifically bad actions by ICE and for the blatant embarrassement that is COICA.

Jim, friend, guy whose strings I buy regularly because you make a GREAT product...please please PLEASE don't back measures that are essentially anti-American and anti-Constitution. I feel for you, I really do. And, truly, I don't think I have an end all be all solution for you. But you CANNOT combat infringement by infringing on others' rights. That is always wrong....

Re: Re: Re: Re:

In my personal experience Ernie Ball wont last as long, but in Ernie Balls defense though i have to admit that there has been a fair amount of guitarplaying at parties so i might not have been entirely sober when most of those strings broke =).

Re: Re: Re: Re:

"which just goes to show that the name on the package isn't the important part."

That is an interesting observation but its wrong from a marketing perspective. I have to admit I am branded in the tooth paste I use, the shampoo, the shoes I wear, the sneakers, the dress shirts, the computers I buy, and a bunch of other things. Most people are. How many apple fanbois (ick) can you think of?

A simple solution would be to create a rule that doubles the penalties for not having the counterfeits labeled "knock off" with double the civil and criminal penalities. This would get the companies free advertising and "people branding" and no advertising cost to them. You could also throw in a percentage of the profit to the affected companies also.

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Thats is what ACTA should have been. Just counterfeits with a rule that allows registration of unauthorized reproductions, profit sharing up to some predetermined percentage limit, and pharma and product safety checks included. Consider it a low end to get people hooked on the brand.

But instead we have ACTA which merges all IP law into one basket, trying to blur the line on all IP, pushing way to far, and bound to cause push back in emerging nations when implemented. So all the companies supporting it will loose in the end. It will be industrialized nation companies, verses the rest of the world, including the people in their own industrialized nations.

Re: Re: Re: Re: Re:

"penalties for not having the counterfeits labeled "knock off" with double the civil and criminal penalities. This would get the companies free advertising and "people branding" and no advertising cost to them."

Hephaestus: This is a very interesting idea that I have not encountered before. Is it something you thought of, or has it been suggested in the past?

Re: Re:

...regardless of what percentage of people we're talking about, some consumers ARE going to be fooled by the infringement, and a business's name is their livelihood.

The solution to this problem isn't to sue every tiny online storefront that sells counterfeit strings. It's publicity.

Make sure your customers know the only legitimate ways to purchase your products. Call out the names of the sites that sell counterfeit strings, and sue a few of the bigger ones. You probably won't get much money out of them, but you will get more publicity.

After that, only people who want the cheaper, non-A'Daddrio strings are going to buy them. Compete for the business of the cheaper consumers, if you want their business. Problem solved.

Re: Re: Re:

"The solution to this problem isn't to sue every tiny online storefront that sells counterfeit strings. It's publicity. "

This. I believe that real counterfeiting is something worth combating, because it is basically false advertising, which is only harmful to companies because it is first harmful to the consumer. It would seem far more effective though to encourage consumers to buy from authorised retailers than to try and sue the counterfeiters.

That means making a honest statement to consumers, by pointing out not that counterfeiting is going to end the world, but by pointing out why the genuine product is better for the consumer. Conflating genuine counterfeiting with other issues or distorting the message in any other way only helps ensure that consumers will continue to trust counterfeiters; whether they say that they have the genuine article, or say that theirs is just as good.

"How is possible for the public to ask the legitimate manufacturers to bear the role of the government and police every instance of fraud with a law suit?"

It is not the government's job to protect you from competition. If you can't compete, you should go out of business. If the only way you can compete is by spending my tax dollars, you should go out of business.

$750,000?!?!

So, you spent $750,000 and it "got nowhere". Well, at least you recognize that much. Seems like as a company owner you would want to not spend $750,000 on activities that get you "nowhere". That's probably 10+ jobs right there!

If you are planning on spending $750,000 in 2011 on something that gets you "nowhere", can I give you my home address, you can just send me a check. You won't have to worry at all what to waste your money on until next year.

Re: $750,000?!?!

Exactly. He spent close to a million dollars and I hadn't heard a word about it. Me, the consumer.

The solution to this problem isn't to sue every tiny online storefront that sells counterfeit strings. It's publicity.

Make sure your customers know the only legitimate ways to purchase your products. Call out the names of the sites that sell counterfeit strings, and sue a few of the bigger ones. You probably won't get much money out of them, but you will get more publicity, for less money than he spent on whatever he spent that quarter of a million bucks on.

After that, only people who want the cheaper, non-A'Daddrio strings are going to buy them. Compete for the business of the cheaper consumers, if you want their business. Problem solved.

Re: Re: Re: $750,000?!?!

Jim D'Addario obviously cares about what I have and haven't heard about his guitar strings, because he spent three-quarters of a million dollars trying to keep people like me from mistakenly purchasing the wrong guitar strings. I say it would be better spent on advertising than attorney's fees, and you call that entitlement? Really?

Re: Re: Re: $750,000?!?!

Re: Re: Re: $750,000?!?!

"More entitlement...who cares what you have and haven't heard."

Rose answered this very well, but I'll elaborate on that a bit more.

People or companies who achieve success, especially if they have been not only been rewarded with money, but also notoriety and fame, sometimes fall victim to the idea that their good position in the economy and in society is due to how good, special or extraordinary THEY are. It leads to a sense of elite entitlement.

In fact, they have been rewarded, not because they are intrinsically better than those around them, but because of what they do for OTHER people. It is the goods, services, or even the sense of well being that they give to others, and the marketplace recognition of this fact, that matters.

This is a subtle, but important point, because those who don't grasp the principle often lose [and deserve to lose] their dominant position, once they become comfortable in their success.

So, having said this, I would suggest that the AC's comment betrays that the sense entitlement is exactly reversed from what he was claiming.

Please Consider the "Other" Side

One of the ideas/concepts not taken into account when supporting these "shoot first - ask questions later" types of laws is "What would happen when it got turned around?". What if I decided to start making guitar strings (heaven forbid) and decided to go on the attack? Let's say I just go out and convince the right person that "D'Addario and Company" are copying me? So, the response should be shut them down until it gets sorted out? What happens to those 1000 jobs while no one can buy D'Addario guitar strings while they were incorrectly accused of pirating them. Once a law like this is on the books, anybody that is not a billion dollar company (and even some of those) could very easily be shut down by a false accusation, until it got straightened out (at least 6 months down the road and counting, since those other websites haven't even been charged with an actual crime yet). Everyone with a web site is going to have to shoot first against all possible competitors (not necessarily just the pirates) just to stay in business.

I wonder what he would think if his site was shut down without a trial or hearing. The people at ICE don't really seem to do much fact checking before seizing sites; so what if his competition convinced ICE agents that his site was full of counterfeit items and he had no chance to ever defend himself. He should consider what it's like to be on the other side of these laws before blindly supporting them.

Re:

Martin, Dean Markley, D'addario

if I gave you an acoustic A string from each and said tell me which manufacturer this came from, I doubt you could pick out the so called "sick good" one.

I'd rather go with a manufacturer who has better things to worry about, and better logic than "we spent .005% of our revenue on lawsuits and they were not fruitful, so we are going sign on to some random censorship bill that we do not thoroughly understand."

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"Perhaps not, but I'd bet if I strung up a D'addario and a knock off on my acoustic guitar and played them for a couple of days, I'd could tell he difference THEN...."

If they can't tell the difference in a lab environment then I would have to wonder how they do quality control. In that story about the magnetic balls (zen magnets?) they told us exactly why theirs were the better product using what are probably the same criteria they use for quality control.

Most important part

Mike, you left out the most important problem with these seizures: the fact that some of these sites had absolutely nothing whatsoever to do with counterfeit products.

They weren't sites selling "fake" goods. They weren't e-commerce sites at all. They were search engines, music blogs, forum sites.

Frankly, I doubt that Joe (or many of the others who signed this) is even aware that this is going on. I honestly don't think he knows what he is supporting, or why everyone has such a big problem with it.

It's exactly what you warned about: the government is intentionally conflating file sharing with counterfeiting. These companies don't want their merchandise knocked off, so they approve of these tactics, completely unaware that they're being used to silence free speech.

He'll probably read your response, but may not read the comments, so I think leaving this out was a mistake.

Daddario

Daddario primarily makes guitar strings. There is nothing more profitable in the MI ( Music Instrument) industry than Instrument strings. Once they get past the capitalized costs of automation (that shark was jumped years and years ago) , they not only make strings for their brand but for numerous other brands too. 1000 Employees at 150 Million in sales averages out to $150,000 per employee in sales. We also are assuming all of them are located in the US too.

With gross profit margins up there with big Pharma and Software companies, the $750,000 dollars that Jim was bitterly complaining about is a tiny drop in the pre-tax profit bucket. I'd be real curious to see what the production employees average pay is, then see what the C-Suite pay is along with dividends to the entire Daddario family.

This is just one more company who uses connections to the govt to socialize the losses and privatize the profits. By having homeland security and other agencies go after the domain squatters he has pushed the cost of defending his trademark onto the taxpayer. That's par for the course these days.

Don't let the "poor ol me, small company" line fool people. They have probably announced a price increase that more than covers actual costs and "reserves which increases the tax deductions. They'll shift the deductible into another category like the catch all line called R&D as the prices stay elevated.

The problem with private companies is, one never sees how much BS is going on. $750,000 is exactly 1/2 of 1% of gross sales. You can bet prices went up to cover it and a whole lot more.

I did not change much in his response, did I?

I agree there should be due process before a site is shut down. I don't know what that process should be, but when there is clear evidence submitted to a government agency that a site is selling fake merchandise the government should have some authority to put a URL on hold until they can defend themselves. Let the thieves absorb the burden of defending themselves, don't expect the legitimate folks to foot the bill.

Let's see:

I agree there should be due process before a business is shut down. I don't know what that process should be, but when there is clear evidence submitted to a government agency that a person is selling fake merchandise the government should have some authority to put that person in prison until they can defend themselves. Let the thieves absorb the burden of defending themselves, don't expect the legitimate folks to foot the bill.

Re: I did not change much in his response, did I?

COICA will affect China how?

First off, I'm not sure trademark is an issue of "STFU and compete". It is a legitimate concern, because there is an effort to deceive the consumer, and possibly besmirch the good rep of a company. Some holes in the argument have been pointed out above, but there one I'd like to mention.

Mr. D'Addario makes several statements about the level of infringement in China.

COICA, and operations by ICE will have exactly 0.00% affect on trademark infringement of D'Addario strings in China.

Further, while he highlights some problems (in China, but for sake of argument, let's assume this has been established as a rampant issue in the US), COICA will have broad, negative consequences which outweigh any positive effect on trademark infringement.

Re: COICA will affect China how?

These people support this legislation because that would be the easiest way to defend against a Chinese, or any other competitor for that matter. Every time someone came in and threatened your business, just file a complaint that they somehow were counterfeiting, infringing, or some other violations tacked on to this bill, then get someone in the government to issue a directive to seize their domain. Viola, competition squashed.

Re: Re: COICA will affect China how?

Re: COICA will affect China how?

"operations by ICE will have exactly 0.00% affect on trademark infringement of D'Addario strings in China"

Actually, I wouldn't be so sure of that. For many years, the US government has actively sent agents to Asia looking to pinpoint the sources of infringement or of unauthorized gray-market goods.

For example, roughly 15 years ago, it was possible to go to Seoul and buy authentic products from Nike, Coach, Columbia Sportswear, Louis Vuitton, etc. for prices that were anywhere from 1/4 to 1/10 of the cost in the US. These items were identical in every respect to goods sold in the US and Europe because they came from the contracted manufacturing sites, which were in Seoul at the time. Local Korean manufacturers were fulfilling their contracted production runs, but were making extra numbers of these items and selling them in shops in Itaewon and other places frequented by foreigners in Korea. These goods were obviously being sold in violation of contracts between the Korean manufacturing plants and the US or European companies. Eventually this became common knowledge, whereupon, US Customs officials came to Korea and "expressed their concern" with Korean government officials. Korean police raids of the shops and factories followed. At first, when the crack-down started, it was still possible to buy some of otherwise authentic goods, but with the brand names cut off of the items. Eventually however, even that became greatly reduced.Overall, US Customs was quite successful with this at that time.

Now that China is the main focus, I doubt they have changed tactics much.

One aspect of this which I wonder about (I am certainly not an expert in international trademark law) -- This looks like a contract issue, and therefore a civil, rather than criminal problem. Nonetheless, US government pressure did result in arrests related to this.

Re: Re: COICA will affect China how?

and so not only do i switch to slinkies but i begin recommending against d'addario. i might even have to conflate, somehow, issues of supporting censorship with issues of product quality for maximum impact

Re: Re: Re:

"There is no way to file a legal law suit in every instance someone is stealing my D'Addario Strings trademark."

Fortunately there is no need to do so, there may be the odd occasion where it would be useful but the majority of situations wouldn't require it.

"We are family owned business in the USA with sales of $150 million. Sounds big, and rich and all that!!!"

Because the sales are obviously great, although your actual profit would be a more useful figure.

"However last year we spent $750,000 on legal battles and got nowhere. We would be bankrupt trying to protect the 1000 jobs that we provide here in the USA"

Sounds like you've followed terrible legal advice and those 750,000 dollars would have been better spent on other tactics or better yet kept in the pockets of you, your family and your employees.
A painful lesson hopefully learned that recourse to the legal system should be used sparingly, if at all.

"We would be bankrupt trying to protect the 1000 jobs that we provide here in the USA. We are not General Motors, IBM or NIke. The scale is not there. "

The scale to launch and sustain lawsuits to no effect?
Pretty much have to say, that that is a good thing.

"If we were allowed legitimate access to the Chinese market and the Chinese were not counterfeiting our product we would be able to create 200 to 500 more jobs in the USA. "

So the Chinese not being out and out communists is now somehow bad for business?
Sure there's a lot of counterfeiting there, have you any idea what the majority of people are living on there?

"Don't paint everyone with a broad stroke of the brush. Telling the companies on the list to work harder is an insult. We work as hard as we possibly can already (its 5:30 AM where i am right now and dont stop working until 6:30 PM. "

Working harder or just smarter, doesn't mean longer hours.
Nor does it even necessarily mean what people generally class as work.

"I have personally visited stores in four Chinese cities to see 7 out of 10 sets of my brand of strings are fake. The packaging is perfect, right down to the American flat and the words "Printed and Made in USA". The strings are shxt. "

So 30% are yours, which says you do have product in China and it is doing well enough and is well respected enough for people to even bother trying to pass their shxt as yours.
But you said you don't have legitimate access to China, how are the genuine articles getting there?

"So your suggestioin to me is to work harder and sue everyone? I may as well close up or cash out and watch the 1000 jobs evaporate. Or better, maybe i should move the factory to China and destroy another 1000 US jobs?
"

Harder doesn't necessarily mean longer and it can just mean smarter.
Step one of smarter would be not wasting 3/4 of a million dollars on pointless law suits.
Just saying that if you do want to use the law courts then use them yourself, don't expect the government and police to do it all for you, especially not if in doing so you are endorsing censorship and punishment for alleged crimes without trial.

"Go on Alibaba.com and witness the hundreds of thousands of fake product listings. There is nothing on the site that is real or legitimate. At some point the government has to take some kind of police action. This is not just a civil matter, there are criminal (grand larceny) implications here. "

Either all items listed there are counterfeits of your products or you can tell that not only are the products purporting to be yours not genuine but that you can identify that all the other products are not genuine but for some reason assume that only a select handful of elites could reach the same conclusion while the people who care enough about guitar strings to want a specific brand, your specific brand are just too damn stupid or ignorant.

"I agree there should be due process before a site is shut down. I dont know what that process should be, but when threre is clear evidence submitted to a government agency that a site is selling fake merchandise the government should have some authority to put a URL on hold until they can defend themselves."

There's this system of courts see, where judges and juries decide if evidence proves or does not prove a case.
If it could be left up to industry or police, we wouldn't have a legal system. It's about hearing both sides of the story, unless there is that chance for the accused to defend themselves it would not be a very good idea for the government to simply be able to close down any business whenever they choose for as long as they choose until a potential court case actually happens.
Like others have said, imagine someone being able to do that to your business it would be vastly more destructive to you than competition or counterfeiting.

"Let the theives absorb the burden of defending themselves, don't expect the legitimate folks to foot the bill. "

Sure let them absorb the burden of defending themselves, but they aren't even being given the opportunity to defend themselves.

"Learn more before developing such strong views and 'black listing' good people"

People have gotten their strong view and black listed you for your signed off on public action. If you didn't want people to react to it perhaps you should have kept it to yourself. You have supported the ultimate in blacklisting without the opportunity of defending themselves for others and you whine about how you've been treated.

Get over yourself, you sell strings for guitars who'd have thought you could do that for a living while not actually sleeping in shelters and eating in food kitchens.

For the record, I won't be black listing you, I don't play guitar so the fact that I had never heard of you was hardly surprising, now I have heard of you and can't help but think negatively of your company every time it's mentioned.
So if somebody I know tells me they have d'addario strings the only thing I will know to say is, "Really? Those idiots"

No one doubts that sites selling counterfeit products is a scary issue for many companies. But that's no reason to throw out the legal books and basic due process, and support gov't-backed censorship of websites on a "guilty until given a chance to prove innocence many months later"

You first attack Jim for not understanding the subtleties of the supposed legislation, then trivialize it yourself in the above response via 'guilty until given a chance to prove innocence many months later'. Moreover, the fact that this legislation calls into question safe harbor may be productive.

Re:

Hmm. You reference the Nike Lawsuit over Counterfeit Sneakers from last year.

It should be pointed out that the Nike story occurred in Britain where the law is quite different from the US. The person who bought the shoes, was found to have violated the law, rather than the website.

The interesting thing despite what might be considered a more stringent law in Britain, suing didn't turn out any better for Nike than it did for Mr. D'Addario. They were awarded only a pair of cheap counterfeit shoes. No money (although presumably their lawyer still got paid).

If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen.

I guess it's natural to want the magic wand of government to wash away the bad people. But, that's not going to happen. Draconian laws will always take out innocents as well.

There are two types of people buying counterfeit strings and it seems that the $750,000 wasted on lawyers could be spent on addressing those people.

- For those who really think they are buying D'Addario they need to be educated that they are not, and how they will get benefits buying the real deal. This is the same as with competition from any other cheaper manufacturer.
- Those who know they are buying counterfeit and just want to have the coolness factor of D'Addario around them. These are customers that can be courted for upgrades. Regardless, these aren't "lost" customers anyway. If they can afford real D'Addario they would just buy other cheap strings.

So what, possibly, does D'Addario think the government will do for him? Let's say the "magic wand" works and the government stops all counterfeiting. The small amount of people who were fooled might buy the real deal if they can afford it and the people who couldnt afford them in the first place would still buy something else.

Now, let's assume the more likely scenario that the "magic wand" doesn't work. One website goes down, 5 minutes later it comes back up somewhere else. Meanwhile, innocents are ensnared. And for what, a small fraction of the people who bought counterfeits thinking they were real?

That's what D'Addario wants to throw away basic American beliefs of innocent until proven guilty for?

I duly suspect that underlining all of D'Addario's response is the belief that he would make a lot more money if the "magic wand" works than he actually would.

Re:

Exactly. He spent close to a million dollars and I hadn't heard a word about it. Me, the consumer.

The solution to this problem isn't to sue every tiny online storefront that sells counterfeit strings. It's publicity.

Make sure your customers know the only legitimate ways to purchase your products. Call out the names of the sites that sell counterfeit strings, and sue a few of the bigger ones. You probably won't get much money out of them, but you will get more publicity, for less money than he spent on whatever he spent that quarter of a million bucks on.

After that, only people who want the cheaper, non-A'Daddrio strings are going to buy them. Compete for the business of the cheaper consumers, if you want their business. Problem solved.

I give you more credit than to think you were comparing them to the no name ones that come on the Starter Kit at WalMart, and doubt Chicago is full of too many Chinese knock offs.

You are more than welcome to have an affinity for their strings, but I assure you it is not because they are "sick good". And I would be damn shocked at the individual who could name the brand of string being played on any recording of any length by audio cues alone.

Re:

There is more to the string to like than just the sound. There are lots of other factors such as how smooth the string is (guitar playing can be rough on fingers as it is), or how easy it is to tune and stay tuned, or the string's durability (you don't want to be replacing them every other session), etc.

Expensive lawsuits or cheap publicity?

Okay, I see that some people who buy the knock-off strings might not know that they're knock-off strings. I still contend that most people would know, but I accept that some may not and this is a problem both because the money goes to the wrong pocket, and because the cheap string experience might damage their reputation.

However, the solution to this problem isn't to sue every tiny online storefront that sells counterfeit strings. It's publicity.

Make sure your customers know the only legitimate ways to purchase your products. Call out the names of the sites that sell counterfeit strings, and sue a few of the bigger ones. You probably won't get much money out of them, but you will get more publicity, for less money than he spent on whatever he spent that quarter of a million bucks on.

After that, only people who want the cheaper, non-A'Daddrio strings are going to buy them. Compete for the business of the cheaper consumers, if you want their business. Problem solved.

The packaging is perfect, right down to the American flat and the words "Printed and Made in USA". The strings are shxt.

This, if true, seems like possibly quite strong evidence that customers are genuinely confused by the counterfeits and that the counterfeits may well be actually harming the brand (he didn't mention whether the prices made it easy to tell the counterfeits from the real ones).

I think this guy is likely making a huge error of reasoning in assuming that other cases of counterfeiting and even copyright infringement have a similar effect to his, but I think Mike is making the very same error in assuming that the economics of counterfeit guitar strings will be similar to that of, say, counterfeit handbags.

Re:

This, if true, seems like possibly quite strong evidence that customers are genuinely confused by the counterfeits and that the counterfeits may well be actually harming the brand...

The solution to this problem isn't to sue every tiny online storefront that sells counterfeit strings. It's publicity.

Make sure your customers know the only legitimate ways to purchase your products. Call out the names of the sites that sell counterfeit strings, and sue a few of the bigger ones. You probably won't get much money out of them, but you will get more publicity, for less money than he spent on whatever he spent that quarter of a million bucks on.

After that, only people who want the cheaper, non-A'Daddrio strings are going to buy them. Compete for the business of the cheaper consumers, if you want their business. Problem solved.

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Re: Re: Re:

Um, AC, quit it with the anonymity. You'll never get points for being Insightful or Funny as an AC. Unless... Could it be...? Do you post entirely without regard for the voting, like I do?

Anyway, the point is to engage in a discussion. I guess you don't realize it, because you're an AC, but many of us with profiles will click directly to our comments to see if anyone has responded. If no one has, on to the next post. Thus, the beauty and purpose of copying and pasting on these types of posts.

Re: Re: Re: Re:

Actually i have to disagree.... the same comment 5 times gets a bit much even when reading it threaded. You don't need to make your point quite so frequently.

If you wish to make it in a thread... be aware that like me (and probably you) they have already read it in an earlier thread. So mix it up... make the point a different way - tailor it to respond specifically to the thread you are replying in.

Re: Re: Re: Re: Re:

Re: Re: Re: Re: Re:

...tailor it to respond specifically to the thread you are replying in.

I did. If you truly read it every time that I posted it, you'd know that.

Also, discussing the point with people who have already posted is more valuable to me than slightly annoying people who can quickly skim past it. In fact, I've had tons of discussion on various points with this technique, but this is the only protest I've ever seen. :)

D'Addario

I went to alibaba.com and did a search on D'Addario - this is what came up:

Important: "D'addario" is a brand name that can only be traded on Alibaba.com with proof of proper authorization. Please confirm with the supplier(s) before trading with them.

And lots of listing for instruments advertising D'Addario strings. So we as taxpayers are to shut down this site because some unscrupulous suppliers are advertising that they as using D'Addario strings? And since they are Chinese companies, nothing can be done to them, but if you shut down alibaba.com, they will simply go somewhere else to ply their wares. All he has to do is use the site to find the ones he can do something about, but obviously not anyone out of the US. Supporting a bad law doesn't fix anything.

Re: D'Addario

I went to alibaba.com and did a search on D'Addario

You know what? I did too, and not a single set of counterfeit guitar strings came up. There are lots and lots of guitar strings, but none that I found claimed they were D'Addario strings, or had confusing packaging.

They may be cheap, crappy strings (with names like "Golden Lion" or "Jixing"), but they're not "counterfeits." They're not illegal in any way.

So when he says "there is nothing on the site that is real or legitimate," he's wrong.

Now, there were several guitars that claimed to have D'Addario strings on them. I'm guessing that's not true - but that would make it more like false advertising than counterfeiting. And who the hell buys a guitar just for the strings?

Re: Re: Re: D'Addario

and you think they would say on their web site that those strings were counterfeit ?

When I went to the site, I couldn't find any guitar strings that even looked like D'Addario strings. They weren't even claiming to sell the genuine article.

I only looked at the first five pages of guitar strings, but nothing I saw looked like it could ever be confused with a name brand. It's like calling those cheap MP3 players "counterfeit iPhones" - no, they're not counterfeit, they're just crappy.

Re: D'Addario

I don't know the first thing about guitar strings, but one thing I do know is that-- Despite Mr. D'addario's claim, Alibaba is a multi-billion dollar corporation through which literally hundreds of thousands of companies sell millions of legitimate products.

is it still competition when they put your logo on their trash?

At what point do these vendors cross the line from infringement to fraud?
Take, for example, Sparkfun's experience with a Chinese "reseller" who copied their website (complete with pictures of the founder's hand holding the products) and began selling counterfeit goods, even reproducing Sparkfun's logo on the items. Sparkfun, of course, is miles ahead of out-competing the knockoff.
At what point do you need to take legal action against such blatant fraud?

I wonder...

I wonder if he'd feel differently if his own domain was taken down due to a (false) infringement claim by one of these copycats. That's why we have "innocent until proven guilty" and "due process", after all...

Re:

"So your suggestioin to me is to work harder and sue everyone? I may as well close up or cash out and watch the 1000 jobs evaporate."

So you want the government to do your work for you and pay the bill of your (what should be) civil issues?

Actually there's a valid argument both sides there:
It costs a fortune to bring a lawsuit against someone who is ripping you off - and it seems that some people are indeed ripping this guy off at least to some extent.

On the other hand it costs a fortune to defend yourself against a bullsh*t lawsuit just because for example someone says your product is derivative and breaching their copyright because it has a faintly similar shaped package and a design at the same angle.

Possibly dangerous to say in a place that seems often full of lawyers, but doesn't that suggest one of the larger problems is that Law and "justice" is only accessible to people with a lot of money to spend on it?

Perhaps what one should fight against is a legal system that requires hundreds of thousands of pounds/dollars for the simplest judgement and seems often to only benefit the lawyers.

As Usual Mike,, ! not a clue...

I can definitely understand where D'Addario is coming from. It's the same position that many of these companies are coming from: they're afraid of the changing marketplace.

Mike can you READ, IT IS NOT THE MARKETPLACE CHANGING, its people who are counterfeiting his product.

The market has not changed, so why so that is the case, to excuse you're claims???

He SAID WHAT HE IS AFRAID OF, and it was not a changing marketplace. OK, Mike if you think it is a changing marketplace, PLEASE FREAKING TELL US HOW IT HAS CHANGED ???

___________

I think he's making an emotional response to a complex issue without realizing the full implications of the position that he's supporting.

Its NOT an emotional response, IT IS A REAL RESPONSE, and do you honestly think MIKE YOU realize the full implications of the position, but he does not ???

So you know better than the CEO of a business affected by counterfeiting, and you understand the FULL IMPLICATIONS and he does not ?? What a joke MIKE.. who the hell do you think you are ??

__________________________

First of all, he overestimates the "damage" done by counterfeit products. We've pointed to study after study that suggest the "harm" done by counterfeits is not nearly as bad as most companies believe.

So Mike you are saying to know more about the damage to D'addario because of counterfeiting than the CEO of that company does!!!!

WHAT FREAKING STUDY ????? that article refers to no specific study that supports your claim Mike.

Oh yea, and your 'other study' says THIS !!!

It also rejects the complaints of designer companies, claiming that losses to the industry as a result of counterfeiting are vastly exaggerated – because most of those who buy fakes would never pay for the real thing – and finding that the rip-off goods can actually promote their brands.

So which is it Mike, ????

Do they buy the original product later on, as one of your 'studies' says, or do they know they have purchased a counterfiet item, and will never buy the original product.

You see Mike you two 'studies' say the opposite things, do you see a problem with that ??

It also rejects the complaints of designer companies, claiming that losses to the industry as a result of counterfeiting are vastly exaggerated – because most of those who buy fakes would never pay for the real thing – and finding that the rip-off goods can actually promote their brands.

Study Shows Counterfeit Buyers Frequently Buy Real Products Later

So which is it Mike, one has to be a lie !!!!

(Mike, don't you have someone to tell you when you are out of your depth ?)

What stuck out to me was the claim that he could add from 200-500 "new jobs" simply based on the belief that if those who bought counterfeits didn't have access to them (fakes) anymore they would immediately run out and buy the legit ones.

He'd be lucky if he even got a 5% conversion rate. Save the $750k. Hire some hackers to DDoS the counterfeiters sites.

Re:

If he is so worried about people buying cheap knockoffs maybe he should try some brand segregation and sell two kinds of strings. Totally awesome ones and cheap pieces of crap.

Unfortunately, that would be more work and he is already up at 5:30 AM responding to random blogs in an effort to defend his position in signing a letter. "Working hard" is a funny phrase because someone like Mr. D'Addario can spend 12 hours a day at the office and still not accomplish anything useful, except signing another letter or check for his lawyer.

Re: Re:

"If he is so worried about people buying cheap knockoffs maybe he should try some brand segregation and sell two kinds of strings. Totally awesome ones and cheap pieces of crap."

That would be, I believe, the correct response. It is partly dependent on the notion that a significant number are aware of the quality of the counterfeits, but might be good business practice anyway, in light of the amount of cheap brands around.

We are family owned business in the USA with sales of $150 million. Sounds big, and rich and all that!!! However last year we spent $750,000 on legal battles and got nowhere.

I admittedly don't know much about guitar strings, but maybe instead of spending half his profits to accomplish nothing, he should spend it on something else? Ads with a line like "Accept no substitutes" or somesuch? Or maybe upping product quality, to blow away the competition? Or some kind of fancy packaging that's harder to fake, to make it easier to recognize the genuine article?

I respect this guy; he sounds like an honest businessman who has good reason to be ticked off. But when your current business strategy ends up flushing $750,000 down the toilet, it's a sign that you need to very carefully re-examine things.

Re:

Ads won't change much. Ads might push people towards the brand name, which is hijacked by the knockoffs. In the end, making more people use their strings just makes the counterfeiters more money as well, because it drives people to the product.

The products are almost as good, most people couldn't tell easily. Guitar players might be able to tell if they use the very specific strings all the time. Even then, it's not so clear.

The only way for him to really compete is to move his manufacturing to China or India or whatever, and compete on price. He could compete using innovative products, but since they are generally ripped off within a short period of time, he could innovate his company into the poor house.

Unfair competition is a real issue, and that is what counterfeiters can do to a business.

Re: Re:

The only way for him to really compete is to move his manufacturing to China or India or whatever, and compete on price. He could compete using innovative products, but since they are generally ripped off within a short period of time, he could innovate his company into the poor house.

Re:

..instead of spending half his profits to accomplish nothing...

He didn't spent half of his profits on this. In fact, there's no way to tell what potion of his profits he spent on this, because he doesn't tell us what his profits are. He does tell us that his company had 150 million dollars in sales, and that he spent 3/4th of a million dollars on this. That's a very small portion of sales.

...maybe... he should spend it on something else? Ads with a line like "Accept no substitutes" or somesuch?

I absolutely agree. Then the people whom are tricked into purchasing counterfeit strings would know to purchase from him. (If they can get past the price difference.)

I respect this guy; he sounds like an honest businessman who has good reason to be ticked off. But when your current business strategy ends up flushing $750,000 down the toilet, it's a sign that you need to very carefully re-examine things.

Again, I absolutely agree. That would be much smarter than flushing more money down the toilet or pissing off customers by supporting COICA.

Proud to say...

Never been so proud to say, I've been a Dean Markley user for over 25 years! Far superior strings in my opinion, and comparing both company's lists of endorsing artists, it appears many of the bigger name guitarists/bands agree. Haven't heard of the majority of the D'Addario users. Mostly seems to be no-name independent musicians with a only few exceptions.

If Jim D'Addario accomplished one thing with this, it's that I'll never even TRY his strings now.

The TV show "How Its Made" just did a profile on these strings. Pretty interesting to see how its made - a lot of human hands, very little technology once the string was "tested" for strength and reliability.

I quote 'Telling the companies on the list to work harder is an insult. We work as hard as we possibly can already (its 5:30 AM where i am right now and dont stop working until 6:30 PM.'
In my experience it is best to not write ones ideas down and publish them when it is 5:30AM, it might be better to do it after that walk or cup of coffee. I have found that people who write as soon as they awaken tend to rant emotionally and thus stray from the point.

Re: Contradictory 'studies'.

Once again Darryl proves the point beyond a shadow of a doubt ... he can't read.

Illiteracy is a serious problem facing out society and I believe that we should use Darryl as a poster child in a new campaign which teaches everything from the basics of the alphabet to comprehension.

During his time at Techdirt Darryl has rambled incoherently and received no more support from the community than tl;dr. I believe that we should band together, send in some money, and purchase flash cards, picture books, and a leap frog "I Can Read" for Darryl.

I use D'Addario strings and can say they are fantastic. If you are reading this, take a bit of advice and just stick with making damn good strings. Seizing URL's and shutting down websites is a not a path you want to go down, or be a part of.

I will keep buying your strings and I will also take care to look for fakes.

leave the forgery stuff to the feds. forget trying to stop counterfeiting in china, they counterfeit entire cars.

The price of tea

"I have personally visited stores in four Chinese cities to see 7 out of 10 sets of my brand of strings are fake. The packaging is perfect, right down to the American flat and the words "Printed and Made in USA". The strings are shxt."

What do unconstitutional domain seizures have to do with retail stores in China?

Studies show that no one is fooled by fake packaging. These studies obviously apply to your strings, no matter how realistic the fake packaging is, and how unsophisticated the consumer is. So don't worry about people being duped by fake packaging. They know they're buying fake strings. The fact is that they want to be buying the real strings, but that is only aspirational. So in the meantime, until they can buy the real strings, they are going to buy the next best thing they can get--strings sold in packaging that looks like the real packaging. Sure the strings suck, but the packaging looks good, so that's what's important. There is simply no way that consumers are being tricked by these fake strings. So stop worrying about it.

Now, the problem here is that you're not connecting with your fans. Well, you are doing a great job of connecting with your fans, that's not what I meant... but you should be doing better. Despite all of your success, clearly you just don't know what you're doing. That's why I'm here. I'm here to help. Your other problem is that you're not competing with yourself and liking it. With piracy, you'll always be competing with yourself, so you may as well embrace it. It doesn't matter that the people you're competing against don't play by the rules. Put on your happy face as the pirates make money off of your good will. How could the fake strings possibly hurt your business or your customers? These pirates are doing you a favor. You've got to put on your A-game and compete against yourself like a man. Since you're competing against yourself, only you can win. See how great piracy is?

Oh, and as far as all that nasty legal stuff about due process and free speech goes--don't worry about it. Not only am I a learned studier of studies, I'm also a constitutional law expert. COICA is straight up illegal. ICE and the seizures are too. There is no other possibility, so I can say this with perfect certainty. If you ever want me to tell you how to run your incredibly successful business again, just stop on by any time.

Re: Re:

They're reading my post with the hopes that one day they can read the real thing. It's aspirational! LOL!

Seriously though, I can understand people wanting to buy knock-off handbags or jeans that look like the real thing but cost less. But who in the world would want to buy knock-off strings? Are they going to show of the packaging to their friends and say, "Look at these D'Addario's!"? LOL! That makes zero sense.

Re:

Huh. Well, as long as we're just making shit up, here's my take on your take:

Mike:

I don't care about your studies. The fact of the matter is that most people are completely stupid and cannot be trusted to have the ounce of skepticism that's required to wonder why a countefeit brand name string is being sold at a lesser price than the real deal, assuming that they were actually fooled by the packaging. No, those people, primarily those NOT in law school, are retarded. And even though I'm acknowledging that there is a disparity in the quality of the merchandise, I'm going to pretend like somebody who plays the guitar sufficiently to warrant the purchase of guitar strings is only going to do so once, and that they will not be subsequently aware of the counterfeit after being oh-so-fooled into buying the knock off and experiencing the defects of counterfeit products.

Now, Mike, the problem here is that you're not a lawyer. And, no, neither am I, but I'm in law school so that's good enough. Despite all of your success, Mike, clearly you have no idea what you're talking about. That's why I'm here. I'm here to help. Your other problem is that you're no simply reciting the law verbatim and then carefully plunging your head up your ass so as to make sure you don't think about the merits or further implications of certain interpretations of those laws. It doesn't matter that the government isn't playing by the rules. Put on your happy face as they bend the constitution over a bench and repeatedly plunge their disease-infested man-sausage into its backside, all the while demanding that the people they're supposed to represent squeal like pigs. That government is doing you a favor. You've got to put on your gimp mask and learn to squeal. That way you don't have to think, the government does your thinking for you.

Oh, and as far as all that nasty civil rights stuff goes--don't worry about it. Not only am I pretty much a Supreme Court Justice, I'm also fairly sure that I was recently pronounced King Judicator of the World. There's DEFINITELY no 1st Amendment issues with COICA, even though there appears to be vociferous debate on both sides, which is weird, since that seems like it wouldn't happen that much if only ONE side had a rational argument. Despite that, there is no other possibility but the truth as I see it, so I can this with perfect certainty. If you ever want me to tell you what to think and why only I'm ever right (EVER!@!#@!), don't worry, because I'll be back in your next post, rambling on and on, occasionally making a cogent point, but more often making thinly-veiled attacks on your intelligence while misrepresenting what you actually said with weird meaningless summaries that no one needs or asked for.

Average Joe

P.S. I secretly love you and I'm just jealous that we haven't had buttsex yet....

Re:

Piracy? Pirates! OHhhhhh, so that is the problem. Pirates are selecting the ships full of the D'Addario strings being shipped to Asia and hijacking them so that they can sell the strings at a lower price. Here I thought it was counterfeiters this whole time and it was really pirates. Mike must have messed up in his original post but I am glad you helped clarify what he meant there AJ. Damn parrot toting peg leggers.

If he is smart...

He will read all these comments. There are some pretty good ideas here for free that he would pay a marketing consultant for if he went that route...ooops are we counterfeit marketing consultants? Let the lawsuits begin (and I've read about lawsuits on TD that make that seem viable in some minds)

Guitar strings

John Pearse guitar strings. A small Pennsylvania company that focuses on quality, rather than whining about counterfeiters and supporting inappropriate censorship and suppression of legitimate web sites.